Yung Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $892,000 in October, $954,000 in November, $1,040,000 in December, and $928,000 in January. Yung's sales are 25% cash and 75% credit. The company's collection history indicates that credit sales are collected as follows: 20% in the month of the sale 65% in the month after the sale 8% two months after the sale 7% are never collected Requirements 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales. 2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Yung Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $892,000 in October, $954,000 in November,
$1,040,000 in December, and $928,000 in January. Yung's sales are 25% cash and 75% credit. The company's collection history indicates that credit
sales are collected as follows:
20% in the month of the sale
65% in the month after the sale
8% two months after the sale
7% are never collected
Requirements
1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales.
2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar.
Yung Reeds
Budgeted Cash Collections from Customers
For the Months of December and January
December
Cash sales
Collection of credit sales:
20% of current month credit sales
65% of prior month credit sales
8% of credit sales two months ago
Total collection of credit sales
Total cash collections
$
$
260,000 $
156,000
465,075
53,520
934,595 $
January
232,000
139,200
507,000
57,240
935,440
Transcribed Image Text:Yung Reeds, a manufacturer of saxophone, oboe, and clarinet reeds, has projected sales to be $892,000 in October, $954,000 in November, $1,040,000 in December, and $928,000 in January. Yung's sales are 25% cash and 75% credit. The company's collection history indicates that credit sales are collected as follows: 20% in the month of the sale 65% in the month after the sale 8% two months after the sale 7% are never collected Requirements 1. Prepare a sales budget for all four months, showing the breakdown between cash and credit sales. 2. Prepare a cash collection budget for December and January. Round all answers up to the nearest dollar. Yung Reeds Budgeted Cash Collections from Customers For the Months of December and January December Cash sales Collection of credit sales: 20% of current month credit sales 65% of prior month credit sales 8% of credit sales two months ago Total collection of credit sales Total cash collections $ $ 260,000 $ 156,000 465,075 53,520 934,595 $ January 232,000 139,200 507,000 57,240 935,440
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